Risk Assessment: The Technology Industry

1592 Words6 Pages
Part I The technology industry is one predicated on constant innovation. Products within the field must provide a compelling value proposition for consumers in order to properly maintain both margins and revenue. Technology companies, particularly those who manufacture products are realizing decreasing margins as the competitive environment matures (Bodie, 2004). Competition for foreign competitors has reduced margins and subsequently profit margins. Cost conscious consumers are now purchasing product based primarily on price rather than specifications. Combine this fact with the macroeconomic factors prevailing in the market and the industry has significant headwinds going forward one year from now. This is particularly true of Dell who has seen an erosion of market share due to the influx and demand of tablet computers. Less demand for traditional laptops has also decreased the profit and operating margins of the firm. Even within its own market, Dell has encountered significant competition for rivals such as HP, IBM, and Microsoft who recently announced its own tablet (Scheck, 2008). Below is a chart indicating markets share within the PC market over the last decade. Notice that market share gains after the housing market collapse have deteriorated. This reflects changing consumer sentiments regarding the overall purchase of PCs and heightened demand for alternative products such as tablets and notebooks. 02 03 04 05 06 07 08 09 10 11 WW Client PCs 15% 16% 17% 18% 16%
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